PORT OF SPAIN, Trinidad, CMC—Finance Minister Colm Imbert Monday presented a budget of TT$54.01 billion (One TT dollar = 0.16 cents) to Parliament, indicating that the government had taken a “deliberate decision not to increase or reduce any existing taxes.”
In a presentation lasting almost five and a half hours, Imbert said that the Keith Rowley administration had decided on any new tax measure “other than some positive adjustments to the tax regime in the energy sector to stimulate exploration and production, among a few other minor adjustments.”
He said the fiscal measures will focus on improving the well-being of every individual in society so that they can reach their full potential, adding, “We are investing in our people.”
Imbert, who has been finance minister since the ruling People’s National Movement (PNM) came to power in 2015 and is expected to face the electorate by August next year, said total expenditure has been pegged at TT$59.2 billion, resulting in a fiscal deficit of TT$5.197 billion.
He told legislators that the fiscal deficit is estimated at 2.7 percent of gross domestic product (GDP), which is within the international benchmark of three percent.
Imbert said that the government has long recognized that the changing dynamics of global energy markets with associated shifts in demand and supply balances for oil and gas generally create public policy dilemmas in the context of oil and gas revenue volatility.
He said the matter had been an issue since the early 1970s and that economic transformation and diversified growth have been features of the national economic planning as we seek to expand the non-energy sector.
“We consistently review oil and gas prices in global energy markets to ensure that under normal conditions, our energy revenue estimates remain reliable to allow us to provide some of the capital and know-how for supporting diversified growth and maintaining the sustainability of our social network.
“Reliable assumptions for oil and gas prices are central to our budget formulation process, and international organizations provide us with in-depth analyses and forecasts,” Imbert said, noting that the fiscal package is predicated on the presumption that oil will be US$85 per barrel, compared with US$92.50 per barrel in 2023, and natural gas will be five US dollars per MMBtu, compared with six dollars per MMBtu in 2023.
“The estimates under this budget framework would materialize and ensure that the economic recovery is anchored on sound and stable macroeconomic conditions. Indeed, as the recovery consolidates, we expect the non-energy sector to expand and advance the diversification agenda.”
He said he proposes initiating action to minimize the country’s socio-economic imbalance and stimulate consumer spending for economic expansion.
“To achieve this objective, I propose to increase the minimum wage by 17 percent, or three TT dollars per hour, from TT$17.50 to TT$20.50 per hour,” Imbert said, noting that this measure will benefit approximately 190,000 persons in the workforce and will take effect from January 1, next year.
In addition, the government said it is extending the Tourism Accommodation Upgrade Project (TAUP) incentive by three years, which was due to expire on September 30, 2023.
“This facility provides a reimbursable grant to eligible tourism accommodation facilities. Madam Speaker, this measure will be reinstated for another three years from November 1, 2023.”
Imbert said export sales facilitate international trade and stimulate domestic economic activity by creating employment, production, and revenues.
“In this highly globalized and competitive environment within which businesses operate, I propose to exempt from business levy manufacturing companies whose gross receipts fall within the 30 percent tax bracket from business levy charges regarding only export sales.
“This measure aims to create a competitive advantage for local manufacturing businesses to engage in exports,” he said, adding that this initiative will take effect from January 1, next year, at an estimated tax loss of TT$20 million.
The government is also proposing to increase the Sustainability Incentive from 20 to 25 percent of the rate of supplemental petroleum tax for mature marine or small marine oil fields.
Imbert said this would encourage smaller oil producers and lease operators in small and mature marine oil fields to incentivize further production.
He said he is also proposing to introduce adjustments to the SPT regime for shallow water areas, similar to what has been implemented for small onshore producers. He would introduce a new threshold of TT$75 per barrel for SPT for small shallow water producers.
“Where feasible, we will also make suitable adjustments to the capital expenditure allowances for small shallow water producers,” he said, adding that the measures will take place from January 1, next year.
He said that with regard to the rapid advancement of technology and the growth of the digital economy, the increasing threat of cyber-attacks means that more secure and concerted efforts are required to protect sensitive information from being penetrated.
He said that to reduce this risk, the government is proposing to introduce a Cybersecurity Investment Tax Allowance of up to TT$500,000 for companies that incur expenditures on cybersecurity software and network security monitoring equipment. To qualify for this allowance, the expenditure must be certified by govt.
Imbert said that this measure is envisioned to incentivize companies to invest in cybersecurity for two years, from January 1, 2024, to December 31, 2025, and will result in an estimated tax loss of eight million dollars.
Imbert told Parliament that, over the years, there had been legislative ambiguity regarding the treatment of expenditures claimed against exempt income.
He said that from a tax administration perspective since income is already exempt from taxation, any expenditure incurred to earn such income should not be allowed as a deduction since it reduces the tax on the non-exempt income.
“I propose to amend the tax legislation to address this issue by disallowing expenditures incurred in earning exempt income, subject to specific provisions of the tax law stating otherwise.
“This initiative will protect the tax base in Trinidad and Tobago, harmonize the law, and bring us into alignment with standard practice in jurisdictions worldwide,” he said, adding that this measure is anticipated to yield approximately TT$75 million in tax savings and will take effect on January 1, next year.
Imbert said that regarding the education sector, the government is proposing to introduce a 150 percent tax allowance of up to TT$500,000 on corporate sponsorship of public and private schools registered with the Ministry of Education.
“It is envisioned that this measure will encourage the enhancement of these schools to ensure that access to and delivery of education are promoted,” he said of the measure that goes into effect at the start of the new year.
Imbert said that while the government has taken “a deliberate decision not to increase or reduce any existing taxes,” this year, “we did not feel that we should impose any further burdens on our citizens, but rather, we should provide some relief in key areas to those at the lower end of the scale.”
He said the government had provided one billion dollars in backpay for those 37,000 public sector workers who have accepted the offer of a four percent wage increase plus increases in some allowances.
“We shall also immediately bring all those public sector workers up to their new salary levels at an additional TT$360 million annually. We are also exempting the one-off payment of TT$4,000 to retirees from tax, which forms part of this process.”
Imbert said that the government is also undertaking to the 37,000 public sector workers that all ministries and agencies involved will be provided with the necessary funds to pay the one billion dollars in backpay by Christmas, adding, “I am requesting all permanent secretaries and accounting officers by way of this budget statement to immediately start preparing the paperwork to achieve this deadline for these payments.
Imbert said that to help needy families, the government will provide school supplies and a book grant of TT$1,000, based on a means test, which will benefit an estimated 65,000 children.
“We have also budgeted for an ambitious capital expenditure program of TT$6.2 billion to stimulate economic growth further. All Ministers will be required in 2024 to do whatever is necessary to fully accomplish our planned Public Sector Investment Programme for this fiscal year.”
During the presentation, which sounded more like a manifesto ahead of the general election, Imbert said the government is introducing several programs designed to help the less fortunate, such as adult literacy and financial literacy, as well as several stimulus programs and support structures designed to boost the economy’s diversification and assist small and medium enterprises, which are the backbone of our productive sector.
“Most importantly… we will focus on assisting the police and other law enforcement agencies to combat and control crime.”
He said that the substantial additional budgetary allocations for vehicles and equipment, inshore vessels, community patrols, the proposed colossal recruitment drive to boost the number of active police officers, and other tangible support for the police are testimony to this. “Further, if more funding is required to assist the Police in achieving its objectives, it will be provided in the mid-year review or before,” Imbert told legislators.
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